The Binh Son Refining and Petrochemical Co. (BSR), the operator of the Dung Quat Oil Refinery in central Quang Ngai province, plans to take out loans of a combined $1.26 billion to expand its capacity, according to a plan unveiled by the Ministry of Industry and Trade.

The loan accounts for 70 per cent of the $1.81 billion needed for the expansion and will come from export credit and foreign and domestic banks, with the remaining 30 per cent to come from the parent company, the Vietnam Oil and Gas Group (PetroVietnam).

BSR has been seeking commercial loans for the upgrades after Russian oil producer Gazprom Neft abandoned plans to acquire a stake of up to 49 per cent in Dung Quat, the sole operating oil refinery in Vietnam.

In August 2015, the UK’s Amec Foster Wheeler was awarded a contract to provide the Front End Engineering Design (FEED) for BSR, which also participated in the first phase of the refinery.

BSR Chairman Mr. Nguyen Hoai Giang previously told VET that the expansion would help increase the refinery’s capacity by 30 per cent as well as cut production costs.

Once completed in 2021, the upgrades would enable BSR to meet 60 per cent of Vietnam’s demand for petroleum products, Mr. Giang said, adding that BSR now has a capacity to process 148,000 barrels of crude oil a day, meeting one-third of the country’s demand.

BSR was valued at $3.2 billion as at end-2015, with the company preparing to launch an initial public offering (IPO) on November 7 this year.

Under a government-approved plan, the State holding in the refinery operator will be cut to less than 50 per cent. It will offer 5-6 per cent to the public while at least 36 per cent will be sold to strategic investors within 12 months of the IPO.

BSR had met with Japan’s JX Nippon Oil & Energy Corp., South Korea’s SK Energy Co., and Gazprom Neft, among others, on the strategic stake sale, but discussions have not progressed.

In the first quarter of this year, it posted revenue of VND21 trillion ($923 million), or 33 per cent of its full-year target, a positive result after the target was set at VND62.4 trillion ($2.74 billion), down 17 per cent against 2016, with profits to plunge 66 per cent to VND1.68 trillion ($739.3 million).

In the 2016-2020 period, BSR aims to record production of 28 million tons, of which diesel oil products will account for 50 per cent, or 14.064 million tons, A92/E5 gasoline over 6.383 million tons, and A95 gasoline 4.14 million tons.